The world of commercial real estate is often moving at a quick pace, but at the same time, we’ve discussed on our blog how rushing through the purchase process can end up costing you dearly if something is missed during the acquisition. Conducting a title search on a property is incredibly important if you hope to avoid these potential unwelcome surprises, and many people wonder if they should begin investigating a title before they make a formal offer. In today’s blog, we explain when a title search is typically conducted and if you should move forward with one prior to making a purchase offer.
When Is A Title Search Performed?
Although it may seem a bit counterintuitive to make an offer on a property before you’ve performed a title search and done some deeper investigation into the property, it is standard practice to wait until an offer is accepted to perform a title search. The key here will be in your written offer. When you’re working with a title service company and a commercial real estate agent, any offer they write will include standard language that explains the offer is contingent on the property passing a number of standard inspections during what’s known as the due diligence phase.
The due diligence phase is the period of time between when an offer is accepted and the official closing date. This period typically ranges from 60-90 days, but it can be shorter or longer depending on a number of specific factors about the property, the seller and the buyer. It is very important that you do not rush through the due diligence process or aim for an expedited closing that will not give you enough time to conduct all the necessary inspections.
Your title service company will likely conduct or order a number of different inspections during this critical phase of the purchase process. If something is discovered during these inspections, which can be quite common in commercial real estate, your purchase offer will lay out how the matter should be resolved if the deal is going to continue. Your purchase agreement may dictate that the seller is responsible for making the necessary fixes to bring the property into an acceptable state, it may allow you to amend your offer without penalty, or it may lay out other processes in order to keep the sale on track. So even though you cannot conduct a title search until you have an accepted offer, know that language in your purchase agreement will offer protection for any issues discovered during the due diligence stage.
This blog should only serve as another reminder as to why it’s important to bring the right professionals aboard when working to make your next commercial purchase. If your offer sheet doesn’t have the right contingencies or you don’t have the right team researching and inspecting the property during the due diligence stage after an offer has been accepted, you could end up making a very costly mistake. Don’t leave your purchase up to chance, especially when this could be one of the largest purchases you’ll ever make. Connect with a title service team and let them go to work for you to ensure your interests are protected throughout the commercial acquisition.
For more information about writing a smart commercial offer letter or checking all the necessary boxes during the due diligence stage of your purchase, connect with the team at Commercial Partners today at (612) 337-2470.